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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Rich Young who wrote (115327)	4/8/1999 10:40:00 PM
From: Meathead	Read Replies (3) \| Respond to of 176387

One step closer to sourcing re-branded PC's from Dell. re: IBM To Offer Entire Product Line On the Web A logical progression for IBM that fits Dell's business model... see what appears to be happening here? If IBM plans to let Dell develop and manufacture a Dell... re-badged to an IBM, they'll have to adopt a model that will reduce reliance on the channel and retail shelf space graveyard. Their current model would not fully leverage the benefits of letting Dell supply systems. IBM wants to stay in the server business (among many other things) and to do that successfully, they really can't give up desktop branding mindshare. It's a known fact that you have to have a full range of products to win corporate accounts where servers sell in the greatest numbers. I think this deal is sounding more logical by the day and looks like a win-win if structured correctly. IBM can still offer a full range of PC's to their customers while only profiting from the sale from IBM sourced components used in the system. Dell still profits from their traditional efficient development and manufacturing process. From Dell's vantage point, it would'nt look much different except for the tremendous volume increase over the next few years.... hello Tennessee. There are a million points to discuss regarding the strategic implications of such a deal. I wonder if Dell would just manufacture IBM designed PC's? A major question in my mind. I tend to believe they wouldn't. For one thing, not only is IBM's manufacturing and distribution efficiency all mucked up, but their in-house PC development costs are too high compared with Dell's. Also, the coordination of all the periphery functions from InCircuitTest to supply chain procurement would be a logistical nightmare and I think Dell would recognize it as a bad deal. Dell deals with an amazing number of component vendors as it is and having to deal with another company's differing component choices all the way down to resistors on the motherboard would be a cost-adder redundant effort. Likewise, IBM would need to re-coup some of their development dollars leaving Dell only to profit from the manufacturing of the system. Why would Dell tie up manufacturing resources for a much smaller return? If the two ultimately strike a deal for Dell to design and manufacture an IBM line of PC's, how will the street react? Hmmmm, maybe Dell's in for a period of >60% revenue growth over the next 2-3 years. MEATHEAD